Pearls and Irritations

Australia’s submarines deal is a lesson in how to offend one country after another: Japan, Germany and now France.

There has been much debate following Prime Minister Scott Morrison’s decision to terminate the French-Australian partnership for the delivery of 12 diesel-electric submarines. That decision warrants further analysis and examination in light of the geopolitical situation, technological developments in submarine warfare, and the history of defence procurement in Australia.

In 2015, the People’s Liberation Army Navy (PLAN) had 255 naval surface ships. By the end of 2020 the fleet had grown to 350, of which 130 are major surface combatants, surpassing the total commissioned US Navy fleet by 57 ships.

While the number of littoral ships and diesel-electric submarines matters in the confined and shallow waters of the South China Sea, the blue-water navy of the United States remains incomparably larger in terms of striking power.

Its combatant vessels comprise about 4.6 million displacement tons, including carrier-based air power, guided missile and multi-mission destroyers, 14 ballistic and four guided missile submarines as well as 50 nuclear-powered attack submarines. The PLAN deploys about 2 million tons’ displacement of guided missile cruisers and destroyers, two aircraft carriers, six ballistic missile submarines, six nuclear-powered attack submarines, 46 diesel-electric attack submarines and numerous anti-submarine capabilities, with a predominantly littoral capability.

China is acutely aware of the US Navy’s capability, and it is constructing new naval ships continues at pace.

For 2026, Beijing has committed some 48 million man hours for the modernisation and construction of naval combat vessels that include nuclear-powered aircraft carriers, guided missile destroyers and frigates, ballistic missile submarines and nuclear-powered attack submarines. The rapid development of anti-submarine warfare capabilities is squarely aimed at denying foreign force submarine access to the South China Sea.

The rapidly growing Chinese navy is not only overtaking the US Navy  in total ship numbers, but also eroding the Pentagon’s technological advantage.

When the Hun Sen regime signed the China-Cambodia trade pact on October 12, 2020 it also gave the PLAN access to the US-built Ream naval base on the Gulf of Thailand.

The recent stand-off between China and Indonesia over the fishing rights in the country’s exclusive economic zone around the Natuna Islands, and China’s ever-expanding presence in the south-west Pacific raises the likelihood of future military staging posts within striking distance of Australia. Alarm bells are ringing in Canberra as the world’s largest gas reserves and iron deposits, uranium and other critical minerals such as rare earths and lithium are within striking range of the PLAN. Urgent action is critical.

The Australian government addressed the growth of China’s national power, including its military modernisation, in the 2016 Defence White Paper.

“China’s power projection in the Indo‐Pacific in and the South China Sea are determining the strategic drivers that will shape Australia’s security environment to 2035,” the in-depth report notes.

First outlined in the 2009 Defence White Paper, the then Labor government promised to continually upgrade the Collins-class submarines and have 12 new boats designed and assembled in Adelaide by 2039. The new submarines would be conventionally powered, boast longer range, greater endurance and support more missions, including land strike capabilities, than the existing 3350-tonne class.

In short, a “regionally-superior” class that exceeds the capabilities of any existing diesel-electric contender.

Project SEA 1000 was established within the Defence Materiel Organisation, with Rear Admiral Rowan Moffitt appointed as its head in 2009.

Without a clear strategy, Australia will not have a submarine navy. Part 2

The Australian Submarine Corporation and Kockums were commissioned to investigate the possibility of a Collins-class life-of-type extension. The Australian Submarine Corporation was also tasked with investigating the feasibility of an evolved Collins design and related technology studies against the options of an existing military-off-the-shelf design, an Australianised military-off-the-shelf design, and an entirely new developmental submarine.

In the subsequent 2013 Defence White Paper, the Labor government remained committed to 12 new generation submarines, destroyers, joint strike fighters, and cruise missiles but again ruled out consideration of nuclear-powered attack submarines.

Making a strategic partnership agreement with Chinese Prime Minister Li Keqiang during her visit to Beijing, then prime minister Julia Gillard emphasised the importance of the bilateral Chinese-Australian relationship, declaring that Australia “does not approach China as an adversary”.

In late 2013 the Liberal-National Coalition returned to power after six years of Labor Party rule.

Newly installed prime minister Tony Abbott underlined his government’s strong commitment to the bilateral defence alliance with the United States.

Then, following then prime minister Shinzō Abe’s visit to Canberra in July 2014, the leaders of both countries decided to upgrade their security cooperation to a “special strategic partnership” by signing a defence technology agreement. In this regard the Japanese PM stated, “There are many things Japan and Australia can do together by each of us joining hands with the United States, an ally for both our nations”.

The six Collins-class boats are due for decommissioning from 2026 to 2034 and Abbott demanded a replacement program to be actioned as a matter of urgency.

With little or no communication with his defence force chiefs, Abbott entered into a handshake agreement with his Japanese counterpart for the next generation Australian submarines to be built in Japan.

And, building upon Abe’s successful July visit to Australia, then defence minister David Johnston met his counterpart Akinori Eto in Tokyo October 2014 to continue the high-level talks on security and defence and ask Japan to help Australia develop new submarines.

The agreement signed on July 8, 2014, by the governments of Australia and Japan for the joint development of submarine technology, and more specifically defence research projects such as the marine hydrodynamics project provided the Japanese with the requisite peace of mind for Mitsubishi/Kawasaki to secure Australia’s largest-ever defence contract.

Accordingly, the two companies began work on an evolved Sōryū-class for the Royal Australian Navy, called the Goryū or “Australian Dragon”.

Washington had given tacit approval to the notion of Australia purchasing Japanese submarines at a time when China was seeking to expand and upgrade its submarine capability in the Pacific.

Rear Admiral Stuart Munsch, who oversaw all US Navy submarines between the International Date Line and the Red Sea, professed that his boats may have to rely on help from Australian and Japanese vessels to monitor increased undersea activity by China, and, “I think that the Japanese have got the lead right now, and am very comfortable being partners with them because of that”.

The concept of an evolved Collins-class design was pushed aside.

The Australian Submarine Corporation was no longer involved in the country’s submarine replacement program despite it being Australia’s core capability for submarine design, construction, and maintenance. Ensuring the Australian Submarine Corporation would not stand in the way of the prime minister’s commitment to acquire Japanese submarines, an over-enthusiastic Johnston famously declared in the Senate that he would not trust it to “build a canoe”.

Such a statement by the defence minister did not go down well.

South Australian MP’s and the general populace did not warm to the idea of a Japanese submarine replacing the home-built Collins-class.

Under political pressure Abbott acted quickly to replace Johnston with his close political ally Kevin Andrews in a pre-Christmas cabinet reshuffle.

To assure his South Australian party colleagues that the future submarines would be assembled in Adelaide, a competitive evaluation process was announced on February 20 2015 by the new defence minister in Adelaide.

The competitive evaluation process was not aimed at eliciting and assessing a full design for the future submarine or identifying firm cost and schedule data — they would be undertaken once the successful international partner had been selected.

Thyssen Krupp Marine Systems of Germany; Direction des Constructions Navales Services of France and the Japanese government were invited to participate in the process — Saab Kockums was conspicuously excluded. The Defence Department would assess the contenders’ ability to partner with Australia to develop a future submarine program that would meet the Royal Australian Navy’s specified capability requirements.

No one in industry, nor probably at that time in the Defence Department, was aware of the government’s intention to select an international submarine designer and technology partner for life rather than simply undertake a submarine design and building study that met the Australian navy’s specified submarine operational requirements.

Fearing a sham competition, opponents of the Sōryū-class launched vitriolic attacks on the Japanese submarine: “Forget culture and language problems,” the Australian Defence Magazine lamented, “as serious as they are. The problem is Australia will not be regionally superior [if partnered] with Japan, and the root-cause of this problem is lack of submarine technology and know-how in Japan. If the Collins were to fight the Soryu today Collins would kill it every time. There is no technology offered by Japan to suggest any evolution of the Soryu can change this situation in the future.”

The Japanese responded by sending the Sōryū-class Hakuryū to Australia for exercise with the Australian navy and to show off their high-tech underwater capabilities.

It was the first Japanese boat to enter Sydney Harbour since the Imperial Japanese Navy slipped three midget submarines into Australian waters, attacking Sydney and Newcastle and sinking the converted ferry HMAS Kuttabul, killing 21 sailors.

On September 14, 2015, Malcolm Turnbull defeated Abbott in a party room ballot and assumed the office of prime minister.

The introduction of the competitive evaluation process in early 2015 did not unsettle the Abe government unduly for as long as Abbott was in charge in Canberra.

The ousting of Abbott and the appointment of a new defence minister, Marise Payne, meant Japan could no longer be assured of automatic selection. Bidding for the submarine program became hotly contested, and the Japanese promised much, including an intention to assemble all 12 future submarines at Adelaide.

It was to no avail. On April 26 2016 the Australian government announced that the French company Direction des Constructions Navales Services had been selected as the preferred international partner for the design of the 12 future submarines, subject to further discussions on commercial matters.

Awarding the $50 billion program was “unequivocally” in favour of the French design.

“This is the absolutely unambiguous recommendation from the Department of Defence that came through the competitive evaluation process,” Turnbull announced. It set the champagne corks popping in Paris, even as Australian politicians and commentators debated the choice.

The Germans were aghast. Thyssen Krupp Marine Systems (TKMS) pushed its vast submarine design and building experience — more than 160 submarines delivered to 20 navies over the past 50 years.

The successful 10-frigate ANZAC-class program gave it in-depth knowledge of labour and material costs and production timelines in Australia. This experience, TKMS claimed, would have delivered the future submarines on time at competitive cost; it would have put the program in a “safe pair of hands”.

Japan’s then new defence minister Gen Nakatani described the Australian government’s decision as “deeply regrettable”. Japan had believed in the hand-shake deal with the then Australian prime minister.

The Abe administration had invested considerable political capital to obtain domestic support for the export of an advanced Sōryū submarine class and his government entered a maritime defence research program with Australia. Japan’s naval shipyards, Mitsubishi and Kawasaki, left their comfort zone by agreeing to an Australian-build program, and, in the eyes of the US Navy the most persuasive argument, the Abe government offered the Royal Australian Navy supply and repair bases in Japan.

The French navy operates submarines across the five oceans. Pointe Chalaix in New Caledonia is Australia’s closest European neighbour. From the Élysée Palace to the National Assembly, the French government backed French industry decisively. The government-owned Direction des Constructions Navales Services claimed that the experience and propulsion technology it transferred from its nuclear submarines made it the preferred candidate for the project.

Direction des Constructions Navales Services’ (renamed Naval Group in 2017) honeymoon was short-lived. The euphoria of winning the $50 billion contract was tempered by critical observations in the media, industry and, of course, by the losing contenders.

The Australian navy debriefing team told TKMS it lost because of unacceptable radiated noise in a particular operational spectrum. The Germans were dumbfounded.

Priding themselves for designing and building the most advanced naval submarines for well over a century, how could the Australians claim that their concept design had an unacceptably high noise level? The Australian Financial Review followed up on this issue with an article on June 6: “Submarine risks questioned when they are still on the drawing board”.

Since the French proposal was chosen, there have been disparaging articles by many: politicians, naval experts, journalists, industrialists and the public at large. The Australian National Audit Office identified time delays, cost blowouts and a dysfunctional relationship between the Defence Department and Naval Group.

Senator Rex Patrick has put the spotlight on the submarine program in hearings of parliament’s Joint Standing Committee on Foreign Affairs, Defence and Trade. Former Liberal Party leader John Hewson has urged the Morrison government to develop a Plan B should the program fall over.

In response, on February 16, 2021, the government announced the establishment of the Naval Shipbuilding Enterprise Governance Committee under the auspices of National Security Committee. Its predecessor, the National Shipbuilding Advisory Board, was abolished, with its former chair, Dr Don Winter — who served as United States secretary of the navy — now working as special advisor to Morrison. Two senior naval officers were tasked to examine options for Australia’s future submarine fleet.

The selection of the nuclear-powered Barracuda-class submarines as the reference points for the Australian navy’s future submarine capability raises a multitude of concerns.

Bound by a 5000-tonne hull displacement, optimisation of the Shortfin Barracuda poses hitherto unheard-of challenges in contemporary diesel-electric submarine design. The French were acutely aware of this problem and proposed the change from diesel-electric to a nuclear propulsion train.

Under the heading “submarine fiasco”, a group of prominent businessmen took out full-page advertisements, suggesting the public has been misled over the future submarine project.

When defence and the government ignored the advertising campaign, public policy and corporate strategy consultancy Insight Economics produced two reports.

“Australian future submarines — getting the key capability right” was launched at the National Press Club in September 2017 by Professor Hugh White — author of How to Defend Australia — and Dr Michael Keating, former head of the Departments of Finance and Prime Minister and Cabinet. It found the program to be too costly, with technical, building and industrial risks too high. It recommended the rapid acquisition of “modified-off-the-shelf” submarines as an insurance policy if the program fell over.

The second Insight Economics Report, “Australia’s future submarines — do we need a plan B?”, was launched at the National Press Club in March 2020. Citing cost blow-outs, the complexity of the design and build, and the fact that the first submarine would not enter service until the mid-2030s, the report called for a plan B.

An evolved Collins Type 2-class, equipped with air independent propulsion (AIP) and/or modern batteries and new diesels would arguably perform better than the Attack-class. However, the most far-reaching recommendation of the report was a call for the future acquisition of submarines with nuclear propulsion.

“Not more robustly challenging the nuclear no-go mindset is probably the biggest regret I have from my time as PM,” Abbott said in speech he gave in June 2017 to the Centre for Independent Studies.

With an eye on the advantage that smaller and quieter diesel-electric boats provide in the shallow waters of the South China Sea, US Navy Pacific fleet Commander Scott Swift warned shortly after Abbott’s speech that any country contemplating nuclear powered vessels or submarines should understand the costs and the technical and crewing challenges.

The issue of nuclear-powered submarines for the Australian navy was, however, raised again by chief of navy Vice Admiral Michael Noonan with Swift’s successor, Admiral John Aquilino, when he left open the prospect of a later batch being nuclear-powered attack submarines.

Ever since contract award in 2016, Naval Group and the Defence Department have not had a smooth relationship.

Confidence in the program has been damaged to the extent that other options are being considered. In September 2018, the government’s Naval Shipbuilding Advisory Board suggested that the government consider alternatives should Naval Group’s performance not improve. The strategic update released by the government on July 1, 2020 concluded that Australia’s strategic environment was deteriorating at a faster rate than identified in the 2016 Defence White Paper.

On June 2, 2021 Defence Secretary Greg Moriarty stated in the Senate estimates hearing that, “it became clear to me that we were having challenges with the Attack-class program over the past 12–15 months,” and that he had several discussions with senior officers how to solve the issues.

With the signing on March 5, 2019 of the preliminary design contract the government committed $605 million to Naval Group. The scope for this phase of work includes the source selection of critical equipment that will determine the submarine design solution. Design review, re-scheduled for January 2021 never materialised; and detailed design was unlikely to start before late 2021, with submarine platform construction commencing in 2023/24.

To keep the current squadron of six Collins-class boats in service for much longer than originally planned, the Royal Australian Navy identified the life-of-type-extension requirements.

Awaiting government approval, that could cost $1.2 billion per boat. If proceeding it would involve detailed structural examination of the submarine platform. It is likely to also include the replacement of the drive train with three modern diesel generators on each submarine, a new permanent magnetic propulsion motor, the main switchboards, and several kilometres of electrical cables. The lead-acid batteries are to be replaced with nickel-zinc (Ni-Zn) dry cells if current testing proves to be successful.

If it proceeds it would involve detailed structural examination of the submarine platform.

Combat systems upgrades for the class are already proceeding. The work scope includes periscope upgrades, mine and obstacle avoidance systems, new flank and high-frequency intercept arrays and improved operator display functionality, and communication and a discrete satellite communication system upgrade.

Tomorrow: What are consequences for the Royal Australian Navy? We will no longer have a submarine navy. Read here.